The Lightning Network is a blockchain transaction-speeding mechanism. Lightning networks are off-chain layers that are created on top of primary chains. The current Bitcoin lightning network was first proposed in 2015. The Lightning Network layer-2 protocol speeds up peer-to-peer payments by creating a network of bidirectional channels on a separate network of nodes that connects with the main chain. Lightning networks keep funds safe by generating multi-signature addresses with signed balance sheets that hold the funds of users. Two parties deposit funds at the designated addresses and conduct transactions with one another, the contents of which are recorded and signed on the relevant balance sheet. These transactions are kept off-chain until the channel is closed, at which point the remaining money is processed as a single transaction on the main chain The funds are then released from the address based on the current balance sheet. This process turns multiple small transactions into a single transaction on the blockchain.
